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World Bank expects China to meet GDP target
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China is likely to meet this year’s economic growth target, the World Bank said in a report released this morning.
Gross domestic product is expected to expand 7.6 percent in 2014, exceeding the government goal of 7.5 percent, according to the bank's China Economic Update.
In the next three to five years, growth will likely slow because the economy may continue to rebalance after a 7.7 percent increase in 2013.
"The rebalancing will be uneven," said Chorching Goh, the bank's leading economist for China. "It reflects tensions between structural trends and near-term demand management measures."
China's economy in the first quarter grew 7.4 percent from a year earlier, the slowest in 18 months. April data, the latest available, also pointed toward a stalling recovery.
China has introduced some mini-stimulus in the past two months to bolster growth while keeping structural reforms on track. The measures included a smaller reserve requirement for rural banks, more investment in railway construction, reducing red tape for traders and growing oversight of shadow banking.
"Economic activity, including industrial production, has shown signs of a pick-up in recent weeks," the report said. "The recent acceleration, which is likely to continue into the next two quarters, reflects robust consumption, a recovery of external demand and new growth supporting measures."
It also identified several risks for the world's second-largest economy.
First, a disorderly deleveraging of local government debt could trigger a sharp slowdown in investment growth. Second, an abrupt change in real estate prices could significantly reduce economic activity. Third, the recovery in exports may not materialize if growth in advanced countries weakens, the bank said.
"The policy responses to these medium-term risks should center on fiscal and financial sector reforms," the report said, adding they have already been part of the government's reform agenda outlined last year.
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